By: Steve Dellar | 06-27-2018 | News
Photo credit: Vladm |

China - Shanghai Stocks Enter Bear Market As US Trade Tension Takes Toll

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If the ongoing trade war between the US and China would be measured by the performance of its stock market, it would immediately be quite clear that President Trump has more leverage than his Beijing counterpart, Mr. Xi Jinping.

The Shanghai Composite stock market dropped some 20% since its peak in January of this year and has thus, by technical definition, entered a bear market.

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So far this year, the Shanghai market lost 14% making it one of the world’s worst-performing large stock indexes. By comparison, the S&P 500, though far off its peak already, is still up slightly for the year. Europe is down some 3 to 4% for its Stoxx 600 index, which engulfs all major indexes.

<blockquote class="twitter-tweet" data-lang="en"><p lang="en" dir="ltr">Good morning. After y&#39;days US bounce, markets in Asia &amp; EU have continued to slide lower. Heavy falls in Shanghai &amp; HK have pushed <a href=";ref_src=twsrc%5Etfw">#China</a> into official bear territory. 11/12 markets down in Asia &amp; 14/15 down in EU. US pre-market <a href=";ref_src=twsrc%5Etfw">#futures</a> predict lower open <a href=";src=ctag&amp;ref_src=twsrc%5Etfw">$SPY</a>; <a href=";src=ctag&amp;ref_src=twsrc%5Etfw">$VXX</a> <a href="">@CNBC</a> <a href=""></a></p>&mdash; Dr Options (@dr_options) <a href="">June 27, 2018</a></blockquote>

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The escalating trade tensions with the US combined with a tumbling currency seems too much for Beijing to control as investors start to realize US President Trump can continuously impose tariffs on imports in the US given that the trade balance for doing so is highly in his favor.

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Robeco, the Dutch asset-management firm advised its clients to get out of China for the year unless the US and China would resolve their difference soon. Ms. Victoria Mio, their Hong Kong-based chief investment officer for China, said: “The trade conflict between the U.S. and China has turned out to be more protracted and more fierce than we had expected.”

“The weakening of the economy has also surpassed market expectations, and the Chinese central bank probably needs to do more to alter such expectations.”

<blockquote class="twitter-tweet" data-lang="en"><p lang="en" dir="ltr">China&#39;s CSI 300 index looks poised to follow in the footsteps of the Shanghai Composite in entering into a bear market. Now down more than 21% from the highs this year after barely holding off the 20% threshold at yesterday&#39;s close. <a href=""></a></p>&mdash; ForexLive (@ForexLive) <a href="">June 27, 2018</a></blockquote>

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Mr Hao Zhou, who performs a similar function at the Chinese branch of German investment firm Commerzbank, repeated: “Clearly, China’s growth outlook has turned gloomier due to weak domestic demand and rising trade tensions, and sentiment has become quite bearish as the markets view that the authorities are worried about the downside risks facing the economy.”


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Thoughts on the above story? Comment below!
4 Comment/s
Schermann No. 29879 2018-06-27 : 15:43

China already has a working model for success; Hong Kong and Taiwan… 💰📈💰

Rocky H. No. 29884 2018-06-27 : 17:00

Yes a working model for successfully manufacturing and flooding the market with counterfeit inferior parts. Difficult enough to compete against slave wages but then to price against say a bolt lacking heat treatment or cheaper material and given bogus documentation claiming it meets code criteria. Outsourcing should never have taken off to the present degree given their history.

Rocky H. No. 29886 2018-06-27 : 17:07

Soros says that trouble in China could cause massive deflation around the world. He also thinks it is possible that the growing refugee crisis in Europe will lead to the collapse of the Euro. That would trigger a massive recession in Europe and cause significant political unrest.

“The world is running into something that it doesn’t know how to handle,” Soros said in January.

the 85-year-old who broke the Bank of England in 1992, is becoming more involved in day-to-day trading at his family office, taking a series of big, bearish bets.

The negative press will help Soros to make more wealth to influence politicians around the globe with.

Soros is no doubt at home in a country that rarely allows any misdeed by one of it's companies to ever be brought to court.

Anonymous No. 29911 2018-06-27 : 23:31

Trump pops the Chinese stock bubble to gain concessions on trade. either way he wins. China can make a deal or see its country fall into chaos, regime changing chaos. Nixon made a smart move in opening china to western trade. The golden noose is tightening.

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